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The real cost of Android: taxes and patent IP licenses

Microsoft have consistently pointed out that Android is not free, nor open. Whether you agree on the latter point really depends on your definition. If it is a matter of degree, then Android is ‘more open’ then WP7 and, of course, iOS. That much is for sure. However, Android is not free to HTC, Samsung and the like. Here’s why.

Some of the key players making Android based mobile phones have crawled into bed with an intellectual properties company called Intellectual Ventures (IV). They pay IV a fee for access to its 30,000 or so registered patents. These patants allow companies using Android to defend themselves against future threats such as when HTC and Motorola were previously been sued by Apple for patent infringement.

It is clear then, that this non-transparent “taxes” comes about from technology licensing and cross-licensing with other patent holders. As Window’s Steve Ballmer states,

“Android has a patent fee. It’s not like Android’s free. You do have to license patents. HTC’s signed a license with us and you’re going to see license fees clearly for Android as well as for Windows.”

HTC is alleged to have said that this dela with IV gives them,

“access to IV’s vast portfolio of more than 30,000 IP assets to defend itself and its subsidiaries from potential litigation.”

Perfect for when developing for Android. There are no free lunches any more, that is for sure. So, although Android might not cost HTC and friends anything up front, they actually end up paying a fee to be able to use some of the patented technologies that might be used within Android, or at least, pay up anyway just in case someone sues them.